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China promises growth but target unchanged

BEIJING, March 5 (BSS/AFP) - China set an unchanged growth target of 7.5 percent for 2013, Premier Wen Jiabao said today, as officials seek to nurture recovery while revamping the model of the world's second-largest economy.

Increasing material prosperity is a key part of the ruling
Communist Party's claim to legitimacy in China, where hundreds of
millions of people have been lifted out of poverty over the past
three decades.

But the Chinese economy expanded 7.8 percent in 2012, its
worst performance for 13 years, in the face of weakness at home
and in key overseas markets after growth of 9.3 percent in 2011
and 10.4 percent in 2010.

It picked up speed at the end of last year, increasing
optimism among analysts that the 2013 figure will come in
stronger, with some expecting it to reach eight percent or
higher.

Nonetheless the government took a more conservative stance,
as it often does -- the target is regularly exceeded in practice.

"We deem it necessary and appropriate to set this year's
target for economic growth at about 7.5 percent, a goal that we
will have to work hard to attain," Wen said in his "work report"
to the opening of the National People's Congress, China's rubber-
stamp parliament.

The figure was the same as the 2012 target. It had
previously been set at around eight percent for seven straight
years, according to the official Xinhua news agency.

Chinese authorities have vowed to change the country's
economic structure, which for decades was led by exports and
massive state-directed investments, into one more responsive to
the growing needs of a consumer-driven society.

Wen re-iterated that message in his speech, saying: "We
should energetically change the growth model."

Analysts said the 2013 growth target was no surprise and
should be easily achievable.

"Currently, we are still at the beginning of the economic
recovery, so for a new government, it will be their priority to
maintain the momentum in the domestic economic recovery," Sun
Junwei, a Beijing-based economist with British bank HSBC, told
AFP.

Keeping last year's target "offers more room for policy
reforms and lifting the quality of economic growth", she said.

Wen also said China planned to add about nine million jobs
in urban areas to keep the official jobless rate there at or
below 4.6 percent, and ensure that real per capita income for
both urban and rural residents increases.

"It is necessary to increase spending to ensure and improve
people's well- being and maintain support for economic growth and
structural adjustment," Wen said.

A separate report issued by the Ministry of Finance said
China would run an increased budget deficit of 1.2 trillion yuan
($193 billion) this year.

The figure is 400 billion yuan higher than last year's
deficit and equal to about two percent of gross domestic product,
the finance ministry report said.

Bank of America Merrill Lynch, which expects the economy to
grow 8.1 percent this year, said the increase was welcome as part
of a "proactive" fiscal policy.

China also set its inflation target for this year at 3.5
percent. The target is lower than last year's, which was set at
4.0 percent. China's actual inflation rate for 2012 came in well
below that, at 2.6 percent.

"China is still under considerable inflationary pressure
this year," Wen said, sounding the alarm on price rises.

Analysts were less concerned.

Sun said given that the current economic recovery was
"relatively moderate", price increases were unlikely to get out
of hand, and she expected the figure to be about three percent
this year.